Impairment losses arising from possible insolvency of debtors (art. 13.1 LIS) not affected by article 11.12 or TD 33.1 of the LIS

When there is a risk in the collection of a certain loan, entities are accounting obligated to record an impairment loss.

On the other hand, article 13.1 of the LIS establishes that only losses due to deterioration of credits derived from the possible insolvencies of debtors will be tax deductible ## when At the time of accrual of the tax, one of the following circumstances occurs:

1. That six months has passed since the obligation fell due.

   With effects for tax periods starting within years 2020 and 2021 , article 14 of Royal Decree-Law 35/2020, of December 22, on urgent measures to support the tourism sector , hospitality and commerce and in tax matters, establishes that taxpayers who have the status of small companies may deduct, in said periods, losses due to deterioration of credits derived of possible insolvencies of debtors when three months have elapsed since the maturity of the obligation.

2. That the debtor is declared to be in bankruptcy proceedings.

3. That the debtor is prosecuted for the crime of confiscation of assets

4. That the obligations have been claimed by the courts or are in litigation or arbitration proceedings, the solution of which depends on their collection.

However, even if the above circumstances occur, will not be tax deductible :

• Those corresponding to credits owed by public law entities, unless they are the subject of an arbitration or judicial procedure regarding their existence or amount.

• Those corresponding to credits owed by related persons or entities, unless they are in bankruptcy and the liquidation phase has been opened by the judge, in the terms established in Royal Legislative Decree 1/2020, of May 5 , which approves the consolidated text of the Bankruptcy Law.

• Those corresponding to global estimates of the risk of insolvencies of clients and debtors.

Filling in form 200

These differences in criteria between the accounting standard and the tax standard determine the need to make a series of adjustments in boxes [00321] and [00322] «Losses due to impairment of art. 13.1 LIS not affected by art. 11.12 LIS nor by DT 33.1 LIS» on page 12 of model 200:

• In the box [00321] of increases, the taxpayer will include the amount of the losses due to impairment of the value of the credits derived from the possible insolvencies of debtors recorded in the tax period being declared, that are not tax deductible according to the provisions of article 13.1 of the LIS.

• On the other hand, the taxpayer will include in the box [00322] of reductions the amount of those losses recorded in the period in which they are tax deductible to comply with the requirements of article 13.1 of the LIS.

• When in a tax period subsequent to the accounting of the aforementioned impairment losses that gave rise to a positive adjustment to the accounting result (box [00321]) because it was not tax deductible, recovery of the value of the impairment occurs , the taxpayer must include in box [00322] the amount corresponding to said reversal.